U.S. Housing Market: What's in Store for the Rest of 2025?

The landscape of the American housing market has transformed dramatically. After years of skyrocketing prices—6% growth in 2022, 5% in 2023, and 4% in 2024—we're witnessing an unprecedented standoff that's brought price appreciation to a virtual standstill at just 0.5% year-over-year by mid-2025.

What's created this remarkable stalemate? We dive deep into the powerful opposing forces shaping today's market. On one side, stubbornly high mortgage rates between 6.7-7% have suppressed buyer demand. On the other, an extraordinary statistic explains why homes aren't flooding the market: over 60% of American homeowners currently enjoy mortgage rates below 4%. This "lock-in effect" has created a market that's cooling but not crashing—a crucial distinction with significant implications for buyers and sellers alike.

The numbers tell a fascinating story. While inventory has increased 32% from last year, existing home sales remain at 30-year lows. Homes now typically sit on the market for 40 days (up 5 days from 2024), and 40% of listings have experienced at least one price reduction—the highest rate in 15 years. Nearly half of sellers now offer concessions like closing cost assistance or mortgage rate buy-downs. Regional variations add another layer of complexity, with some Sunbelt markets seeing modest price declines while other regions maintain slight growth.

Looking ahead, expert forecasts range from -2% to +4% for the remainder of 2025, suggesting a period of relative stability after years of volatility. Whether you're considering buying, selling, or simply understanding the economy, this episode provides essential strategic insights for navigating this transformed housing landscape. Subscribe to stay informed as we continue tracking the evolution of this pivotal market shift!

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Episode Transcript

Speaker 1 (00:00):
Welcome to the Deep Dive.
You know if you've been keepingan eye on the US housing market
.
Well, it's just painting acompletely different picture
lately, isn't it?

Speaker 2 (00:07):
Oh, absolutely Nothing like that pandemic era
frenzy we all got used to.

Speaker 1 (00:12):
Right, we saw those huge price surges.
Was it 6% in 2022, then 5% in2023, and still like a solid 4%
just last year, 2024.

Speaker 2 (00:22):
Strong growth.

Speaker 1 (00:23):
But now, as of say, mid-june 2025, that momentum has
just well, it's practicallyflatlined.
Prices are only up about 0.5%year over year.

Speaker 2 (00:34):
It's quite a shift, a really striking contrast, yeah.

Speaker 1 (00:36):
Okay, so let's unpack this.
Our mission today is really todig into these latest housing
stats, pull out the you know,the important bits and explore
the trends shaping things as wehead towards the end of 2025.

Speaker 2 (00:47):
And we want to make sure this goes beyond just
rattling off numbers for you.
We'll get into the why, why themarket's acting this way and
maybe more importantly, what itactually means for you, whether
you're thinking of buying,selling or just, you know,
watching the economy.

Speaker 1 (00:59):
So the big picture right now, the US housing market
.
You could almost describe it asa standoff right.
It feels largely frozen.

Speaker 2 (01:08):
That's a good way to put it, frozen or stuck, maybe.

Speaker 1 (01:10):
Yeah, because you've got these two big forces pushing
against each other.
First, those stubbornly highmortgage rates.
They're sort of hoveringbetween 6.7% and 7%.

Speaker 2 (01:19):
Right around there, yeah, which definitely keeps
buyer demand pretty low,historically speaking.

Speaker 1 (01:24):
But then, countering that, there's this incredibly
powerful lock-in effect.
It's stopping a flood of homesfrom even coming onto the market
.
It's like a tug-of-war.

Speaker 2 (01:34):
A real stalemate.

Speaker 1 (01:35):
You know, I saw this statistic and it genuinely blew
me away.
Over 60% of American homeownersthey have a mortgage rate below
4% 60%.

Speaker 2 (01:44):
It's an amazing number.

Speaker 1 (01:46):
I mean, just think about that for a second.
What does that tell you aboutwhy this market is so well
unique right now?

Speaker 2 (01:52):
It's really the heart of that standoff you mentioned.
What's fascinating here is howthis tension, you know, low
demand because of high rates,but also super low supply
because people won't give upthose amazing old rates
Understandably, exactly,understandably unwilling, it
creates a market that's cooling,yes, but not crashing, and that
distinction is crucial.

Speaker 1 (02:13):
Explain that a bit more Cooling, not crashing.

Speaker 2 (02:15):
Well, a crash implies prices falling rapidly across
the board.
What we're seeing instead isprices mostly flatlining, maybe
dipping slightly in some areas,activity slowing way down, but
no plummeting, and that'sprecisely because so few homes
are actually being listed forsale.
It's a slowdown, a deep freezemaybe, but not quite a collapse.

Speaker 1 (02:35):
And the numbers.
They really do bear that out,don't they?
Let's look at prices first.
The median home price.
It's up just what 0.5% to maybe1.7% from last summer.

Speaker 2 (02:44):
Barely moving, yeah.

Speaker 1 (02:45):
That's the softest price environment we've seen in
years, really A huge change fromthe pandemic jumps.

Speaker 2 (02:50):
And it's worth adding context there Wages have
actually gone up what over 4% inthat same time.

Speaker 1 (02:55):
Right.
So in real terms, homes areactually slightly more
affordable technically than ayear ago Still expensive, mind
you, but slightly betterrelative to income.

Speaker 2 (03:03):
Small silver lining perhaps.

Speaker 1 (03:04):
But OK.
While prices are plateauing,that's only one side of it.
What about supply, the numberof homes actually for sale?
Because that's where we'reseeing another big shift.

Speaker 2 (03:13):
We are finally seeing inventory return, which is key.

Speaker 1 (03:17):
Yeah, the number of single family homes listed is up
32% from last year.
It's a pretty solid jump.

Speaker 2 (03:24):
It is.
It brings us closer towards,you know, pre-pandemic levels.
We're talking around 826,000single family homes on the
market mid-June.

Speaker 1 (03:31):
So that extreme housing shortage we kept talking
about, yeah, it's easing up.

Speaker 2 (03:36):
It is easing, thankfully.
What's really interesting aboutthat 32% jump, though, it's not
just the number itself, it'swhat it suggests about maybe
seller psychology finallystarting to shift a bit from
that frenzy era.

Speaker 1 (03:48):
Good point.

Speaker 2 (03:49):
For so long there was nothing for sale.
Now homes are starting to kindof trickle back, but and this is
a big but- Always a but.
Right.
Even with that inventory,increase actual sales.
Existing home sales are stillincredibly slow, like hovering
around a 30 year low, 30yearsyear low 30 years.
Yeah, so it just confirms youknow the days of homes flying

(04:09):
off the market in a singleweekend.
Those are definitely gone fornow.

Speaker 1 (04:12):
So this raises an important question then what
does all this mean for thebalance of power between buyers
and sellers?

Speaker 2 (04:20):
That's exactly where this leads.
It feels like that balance isfinally shifting, moving away
from that extreme seller'smarket we got so used to.

Speaker 1 (04:27):
Okay, how so that expanding inventory, the 32%
increase?
How's that playing out on theground?

Speaker 2 (04:35):
Well for one, homes are staying on the market longer
.
The typical home now sits forabout 40 days.

Speaker 1 (04:41):
And that's up from last year.

Speaker 2 (04:42):
Yep up five days from last year Gives buyers a bit
more breathing room.

Speaker 1 (04:46):
And price adjustments .
Are we seeing more of those?

Speaker 2 (04:48):
Definitely.
About 40%.
0% of homes listed have had atleast one price reduction 40%,
that's high.
It's a rate we haven't seen inlike 15 years.
It tells you sellers are havingto be more realistic.

Speaker 1 (05:01):
And it's not just price cuts, right.
You mentioned sellers offeringconcessions too.

Speaker 2 (05:04):
Yes, that's becoming much more common.
Nearly half of sellers areproviding some kind of incentive
.

Speaker 1 (05:10):
Like what kind of things?

Speaker 2 (05:15):
Things like helping out with closing costs or maybe
doing a mortgage rate buy downwhere they basically pay points
to lower the buyer's interestrate for the first year or two.

Speaker 1 (05:20):
Ah, okay, Buying down the rate that can make a
difference with these high rates.

Speaker 2 (05:24):
It absolutely can.
So the practical implicationsof all these shifts they're
pretty significant for you thelistener.
If you're a buyer, thispatience in the market, the
growing inventory, it means morechoice and, crucially, more
room to negotiate.

Speaker 1 (05:39):
So potentially a better deal.

Speaker 2 (05:40):
Potentially yes, as homes sit longer and sellers get
more willing to deal.
It's just a different ballgameNow.
For sellers, it really meansyou need a different strategy.

Speaker 1 (05:50):
Right, can't just list high and expect multiple
offers over asking anymore.

Speaker 2 (05:53):
Largely no.
Realistic pricing right fromthe start is key now, and being
prepared for some propernegotiation, maybe including
those concessions.

Speaker 1 (06:05):
It's essential.
It really sounds like a marketthat requires more patience,
more strategy from everyoneinvolved.

Speaker 2 (06:08):
Exactly Thoughtful decisions over rushed ones.

Speaker 1 (06:11):
Now we've been talking national trends, but
it's always a case of location,location, location, isn't it?
This isn't happening uniformlyeverywhere.

Speaker 2 (06:18):
Oh, absolutely not.
The housing market isdefinitely not a monolith.
There are significant regionaldifferences.
I mean, think back a couple ofyears.
Places like Boise, idaho, werewhite hot.
Totally different story therenow, compared to, say, parts of
the Northeast.

Speaker 1 (06:32):
Right.
So where are we seeing thebiggest variations?

Speaker 2 (06:35):
Well, look at some of those Sunbelt markets parts of
Arizona, florida biggestvariations.
Well, look at some of thosesunbelt markets parts of Arizona
, florida, texas for exampleplaces that saw a lot of new
construction or maybe highinvestor activity.
Okay, what's happening there?
In some of those areas,inventory has actually climbed
back up to or even abovepre-pandemic levels.
Wow, above yes, and as a result, prices there have stabilized

(06:56):
or in some cases even dippedslightly year over year.

Speaker 1 (06:59):
Do we have specific examples, states where prices
are actually down?

Speaker 2 (07:03):
Yeah, as of mid-2025, prices were below 2024 levels
in a few places Hawaii was downabout 3.8 percent, iowa down 2.0
percent, arizona down 1.6percent, georgia down 1.3
percent and Florida down 1.2percent.
Small dips, but still down.

Speaker 1 (07:19):
OK, so that's the Sun Belt.
Some cooling there.
What about other regions likethe Midwest or the Northeast?

Speaker 2 (07:26):
Those regions tend to have relatively tighter
inventories still.
So, while price growth hasdefinitely slowed down, it's
generally still positive, albeitsubdued, less dramatic cooling
there.

Speaker 1 (07:38):
It really is like different microclimates within
the same country.

Speaker 2 (07:42):
Perfectly put.
And if we connect this back tothe bigger picture, especially
in those Sunbelt areas, new homeconstruction is playing a
really significant role inboosting that supply.

Speaker 1 (07:53):
The builders right.

Speaker 2 (07:54):
The builders have really ramped up activity.
New single family home salesare actually running above their
pre-2020 averages.

Speaker 1 (08:01):
Interesting.
Are they doing anythingdifferently?

Speaker 2 (08:03):
Yes, many are offering incentives, just like
resale sellers, rate buy downs,closing cost help, and they're
also focusing a bit more onbuilding slightly more
affordable homes, maybe smallerfootprints, and that's helped
narrow the price gap thatexisted for a while between
brand new homes and existinghomes.
This new supply is a key reasoninventory is up overall and it
definitely takes some pressureoff.

Speaker 1 (08:25):
So, putting all this together, the flatlining prices,
the returning inventory, theregional differences, what does
this actually mean for the nearfuture, say the rest of 2025?
.

Speaker 2 (08:40):
What are the experts forecasting?
Well, as you might expect withall these moving parts, the
forecasts are a bit mixed.
Generally, they point towardsstability, but some see slight
increases, others slightdecreases.
There isn't a strong consensuson direction, just that big
moves are unlikely.
Okay give us the range.
Who's predicting what?
All right.
So on the side predictingslight declines, redfin for
instance, they project a modestdip of about 1% nationally by

(09:03):
the end of Q4 2025.

Speaker 1 (09:05):
Okay, minus 1%.

Speaker 2 (09:06):
Zillow is looking a bit further out, forecasting
about a 1.7% drop in home valuesfrom spring 2025 to spring 2026
.

Speaker 1 (09:14):
Minus 1.7%.

Speaker 2 (09:15):
And Morgan Stanley.
Their base case forecast is forroughly a 2% decline in
national prices for the fullyear 2025.

Speaker 1 (09:22):
Okay, so Redfin Zillow, Morgan Stanley seeing
small drops, but you said,others predict gains.

Speaker 2 (09:27):
That's right.
Jp Morgan, for example, they'reforecasting a price gain of
around 3% in 2025.

Speaker 1 (09:31):
Plus 3%.
What's their reasoning?

Speaker 2 (09:33):
They assume basically that supply won't suddenly
flood the market because of thatlock-in effect and that the
economy keeps growing steadily.

Speaker 1 (09:39):
Makes sense.
Who else sees gains?

Speaker 2 (09:42):
Well, there was a survey of economists by
Paulsonomics.
Their average forecast was alsoaround plus 3%.

Speaker 1 (09:48):
Okay.

Speaker 2 (09:49):
And then you have the big industry groups Fannie Mae,
the Mortgage BankersAssociation, mba, the National
Association of Realtors, nar.
Their projections are generallyfor modest growth, anywhere
from, say, plus 1.3% to plus4.1%.

Speaker 1 (10:05):
Wow, okay, so predictions range from roughly
minus 2% to plus 4%.
That's quite a spread.
How do we make sense of thatfor the average person?

Speaker 2 (10:13):
It is a spread and it really highlights the
uncertainty.
But if you sort of synthesizeall these different views, the
prevailing takeaway seems to bea market that's likely to be
flat to gently fluctuating.

Speaker 1 (10:23):
So stable-ish.

Speaker 2 (10:24):
Stable-ish exactly, Especially for the national
average.
Sure, some specific areas,maybe highly overvalued ones,
could see bigger drops, butoverall stability seems likely,
mainly because that supplyconstraint, that lock-in effect,
is so persistent.

Speaker 1 (10:36):
And sales volume Still slow.

Speaker 2 (10:39):
Sales volumes are expected to stay Pretty muted.
Yeah, and mortgage rates Mostforecasts see them staying
roughly in the mid 6% range,maybe drifting slightly, but no
big drops anticipated soon.

Speaker 1 (10:51):
So the overall picture is stability, not
dramatic change up or down.
That's the key takeaway for youlistening.

Speaker 2 (10:58):
I think that's the most useful takeaway.
Yes, A period of relative calm,maybe even stagnation, compared
to the roller coaster of thelast few years.

Speaker 1 (11:05):
calm- maybe even stagnation compared to the
roller coaster of the last fewyears.
Okay, so for you, the listenernavigating this market right now
, it sounds like a definiteshift in dynamics compared to
that frantic pace.
We remember Absolutely, ifyou're a buyer, that increased
inventory home sitting longer.
It means you likely have morechoices, maybe more time to
think and definitely moreopportunity to negotiate Right

(11:25):
those price reductions, theseller concessions.

Speaker 2 (11:27):
They could really work to your advantage.
Don't be afraid to ask.

Speaker 1 (11:30):
And for sellers, what's the advice?
It?

Speaker 2 (11:32):
really boils down to adjusting expectations.
Pricing realistically rightfrom the start is probably more
important than ever.

Speaker 1 (11:39):
To avoid sitting on the market too long and having
to do multiple price cuts later.

Speaker 2 (11:43):
Exactly that can stigmatize a property and also
be prepared for negotiations.
Be ready to discuss concessions.
You're not automatically in thedriver's seat anymore in most
markets.

Speaker 1 (11:54):
So it sounds like, whether you're buying or selling
, the current market reallyfavors a more strategic approach
Thoughtful decisions, notrushed ones.

Speaker 2 (12:05):
That sums it up perfectly.
Take your time, do yourhomework, understand your local
conditions.
Strategy is key right now.

Speaker 1 (12:12):
So, to wrap up, it really feels like the US housing
market is entering a period ofmaybe greater stability, a kind
of recalibration after thecraziness.

Speaker 2 (12:21):
I think that's right.
It's this interplay, isn't it?
High rates, affordability,challenges, but also more
inventory, yet held back by thatpowerful lock-in effect.

Speaker 1 (12:28):
And all that is contributing to a market that's
just far less volatile than itwas.
Activity is lower, yes, but amajor crash, a widespread
downturn, that's not what mostexperts are anticipating.

Speaker 2 (12:39):
Joe, it seems more like a transition, a move
towards maybe more sustainable,more, dare I say, normal market
dynamics, Slower perhaps, butmore balanced.

Speaker 1 (12:48):
Yeah, perhaps.

Speaker 2 (12:49):
And you know, this period of stability, especially
with that lock-in effect seemingso sticky, it raises a really
interesting long-term questionfor you to maybe ponder.

Speaker 1 (12:59):
Oh, what's that?

Speaker 2 (13:01):
How might this whole situation the high rates, the
locked-in owners, thepotentially slower pace of
turnover how might that reshapeour fundamental expectations
about homeownership, aboutmarket activity, especially for
future generations who might benavigating totally different
financial landscapes?

Speaker 1 (13:19):
That's a fascinating thought.
How does the lock-in effectchange the game long-term?

Speaker 2 (13:22):
Exactly Something to keep an eye on, so we encourage
you to continue watching thosekey indicators mortgage rates,
inventory levels in your areaand how different regions are
performing.
The story is definitely stillunfolding.